Are you new on the board, and faced with building the 2019 budget? Are you a unit owner, and just want to understand your fees? Keep reading!
So, what’s in a budget? Well, the Florida statutes tell us what has to be, as well as the Association’s governing documents.
For condos, Ch 718 says:
718.112(2)(f) Annual budget.—
1. The proposed annual budget of estimated revenues and expenses must be detailed and must show the amounts budgeted by accounts and expense classifications, including, at a minimum, any applicable expenses listed in s. 718.504(21).
So, what’s in s. 718.504(21)?
- Administration of the association.
- Management fees.
- Maintenance.
- Rent for recreational and other commonly used facilities.
- Taxes upon association property.
- Taxes upon leased areas.
- Insurance.
- Security provisions.
- Other expenses.
- Operating capital.
- Reserves.
- Fees payable to the division.
Kind of generic, right? So, more guidance, from 718.115:
(1)(a) Common expenses include the expenses of the operation, maintenance, repair, replacement, or protection of the common elements and association property, costs of carrying out the powers and duties of the association, and any other expense, whether or not included in the foregoing, designated as common expense by this chapter, the declaration, the documents creating the association, or the bylaws. Common expenses also include reasonable transportation services, insurance for directors and officers, road maintenance and operation expenses, in-house communications, and security services, which are reasonably related to the general benefit of the unit owners even if such expenses do not attach to the common elements or property of the condominium.
This is still fairly generic. Essentially, it is all the costs related to administering, repairing and maintaining the association and it's common property: Insurance, utilities, professional fees, plumbing and electrical repair, clubhouse or other amenities repairs and maintenance, landscaping, etc.
What else? Reserves, of course!
2.a. In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000.
Of course, we all know that unit owners have the right to vote to reduce or waive the required reserves in the budget. Just remember - it is a UNIT OWNER vote (not a board vote), it must be done for every budget year, and must take place before the start of the budget year.
Keep an eye out - we'll have more blogs on budgeting in associations coming soon.
